Getting your credit score above that coveted 800 mark is a tough road. It takes a lot of hard work and dedication to slowly build your credit score into something you’re proud of. For anyone not looking to obtain an excellent credit score, allow me to offer you five easy ways to ensure your credit score is never anything to be proud of.
1. Apply for a lot of credit
What’s not to love about getting lots of discounts at the stores you shop at most? Gap offers you 20% off your purchase if you open one of their store credit cards. Kohl’s gives 15-30% off regularly if you shop with their credit card. Why not get them all?
Applying for a credit card results in a hard inquiry on your credit report, and each hard inquiry negatively affects your credit score by a few points. But, the more cards you apply for, the more cumulative damage to your credit and the closer you get to the goal of a super-low credit score. For example, with a fair credit score around 699, only eight credit inquiries can result in a drop of 55 points.
2. Start maxing out your credit cards.
Sometimes, there are just things you need. Like a new flat-screen television, those baseball tickets, or that professional espresso machine. All of these things will greatly improve your life right now, so why not max out that credit card and worry about the consequences later? By maxing out just one card, your score could decrease by up to 30 points with a current score of 680, and up to 45 points with a score of 780.
3. Stop paying the monthly minimum.
Credit cards are there so you can buy a Wii and not think about the cost for several months, right? Avoid paying your monthly minimum on time and your credit score is guaranteed to plunge. After all, your payment history is the most important factor when it comes to calculating your credit score. A good credit score can drop upwards of 25 points with just one missed payment on a credit card.
4. Stop using credit.
Why start taking chances with a credit card? You live within your means, and cover everything with cash or debit. Responsible credit card utilization, as long as it’s below 30% of your total available credit, will actually raise your credit score. So don’t use credit at all.
For a guaranteed quick drop in your score, close your oldest credit card account. If your current score is in the good-excellent range, this action could drop your score a whopping 45 points. Without recent history that showcases your responsible credit use, lenders will determine you are not credit worthy.
5. Stop digging yourself out.
If you’ve already hit a low credit score and you’re hopelessly trying to climb your way back up, stop. A record of bankruptcy can stay on your credit report for up to 10 years, and most other derogatory marks stay on for 7 years. You can’t do anything to help yourself anyway, so you might as well just resolve to avoid creditors and stay off the grid.
In all seriousness, you should never do any of these things. These five ways to drop your credit score are red flags to be avoided at all costs. The problem is that ruining your credit score is as easy as forgetting a payment or not being cautious with your credit use; it takes active credit management and constant discipline to have healthy credit. Making minimum payments, healthy credit utilization, and financial responsibility are the real steps you need to take to establish healthy habits and benefit your credit score.
The difference between being approved for a home mortgage, auto loan, or even your next job could hinge on your credit score. So avoid forming these bad habits at all costs and use Credit Karma’s totally free credit tools and resources to track your credit score and get your credit back to optimal health.
Credit Karma™ is a completely free credit management service that provides free credit scores, financial education, and personalized savings recommendations. We help more than 2 million consumers realize the everyday cost savings of having a good credit score.
Published or updated March 14, 2011.